Are personal relationships the best model for loyalty?

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By: Wise Marketer Staff |

Posted on May 29, 2008

A white paper from Ipsos MORI Loyalty has studied the extent to which the metaphor of personal relationships can be applied to interactions between individual consumers and companies, focusing on the customer relationship from the viewpoint of the customer rather than the supplier.

The paper by Alex Bollen and Claire Emes, entitled 'Understanding Customer Relationships: How important is the personal touch?', reflects that while relationship marketing is a useful tool for better understanding customers, customer relationships can be viewed from a different and more holistic perspective.

What's in a relationship?
Not all relationships are the same, and the authors argue that customers want and expect different things from relationships with different companies, just as they have different needs and expectations in personal relationships. In interpersonal relationship theory, relationships have been categorised first by the types of bond that join people together, and second by the nature of the benefits that each person offers:

  1. The type of bond: what ties us together?
    If we consider customer relationships through the lens of personal relationships, we can think of relationships in terms of levels of emotional attachment and choice. For example, a customer's relationship with their favourite brand of perfume (i.e. high emotional attachment and a high level of personal choice) could be considered a "committed partnership", while their relationship with a council service or utility provider (i.e. low emotional attachment and a low level of choice) may be considered to be more like a "marriage of convenience".

    And the bonds between customers and suppliers are changing every day. The balance of power has shifted toward customers as new technology has redressed the imbalance in the flow of information between customers and the companies they deal with. Customers now not only have more information and a greater choice but they are also able to voice their dissatisfaction far more loudly than ever before (thanks, for example, to the widespread influence of internet channels such as social networks and blogs).

    Interestingly, this shift in the balance of power has contributed to a change in customers' expectations. Companies are now expected to pay more attention to caring for customers, and customers put greater emphasis on honesty and integrity, demanding more transparency from suppliers. Furthermore, there has been a distinct growth in interest in environmental and social responsibility, with businesses increasingly recognising that they are part of a community and a wider world.

  2. The benefits: what's in it for me?
    According to Bollen and Emes, companies now need to consider relational benefits from the customer's perspective because this will help them understand how to strengthen the relationship and achieve their desired loyalty outcomes. One recent study identified three categories of relational benefit:
    1. Confidence benefits;
    2. Social benefits;
    3. Special treatment benefits.

    But there are other relational benefits from the customer's perspective. For example, relationships can be reinforced by adding a specific purpose (such as a shared commitment between customer and supplier to help the environment). And customers are also increasingly expecting their supplier relationships to offer experiential benefits. As products and services have become commoditised, companies such as Starbucks have built their business around experiences that engage customers and connect with them in a highly personal and memorable way.

    When it comes to the public sector, most people believe that "users" should be treated as "customers", but public services clearly need to do more than just understanding people's needs. These organisations need to understand the nature of the relationship between user and provider, and identify the types of relational benefits that will result in the best outcome for both parties.

The dynamics of customer relationships
The dynamics of customer relationships are such that they take place across many touchpoints, and they change and evolve over time (whether in response to the supplier's or the customer's actions, the customer's circumstances changing, or competitor activity).

As with personal relationships, when problems occur in interactions between suppliers and customers, the mindsets of the individuals, the strength of the relationship before the disagreement, and how the situation is managed will all strongly influence the outcome. A complaint is a true 'moment of truth' in the relationship; if the company gets it right there is potential to actually improve customer loyalty - and the human touch is critical in this because customers want to feel that they are valued.

Empower the employees
Employees play a crucial role in the customer relationship. Whilst links between employee attitude, customer satisfaction and the bottom line have not been consistently proven, employees clearly matter, with poor morale not only damaging operations but also negatively impacting the customer experience.

Employees do more than deliver customer service. They personalise the relationship between the customer and the company, and they need to be empowered and enabled to play their part in building and maintaining strong relationships.

Relationship influencers
Relationships exist within the context of other relationships, and what people in our lives say and do in relation to a particular supplier can affect our relationship with them. Some individuals are more influential than others, such as the so-called New Influencers, who reward or punish good or bad corporate behaviour by passing the message on to others and leading by example.

Companies therefore need to recognise who may be influencing their customers, and how this can impact customer relationships. As with personal relationships, effective communication is a major key to successful customer relationships. The authors note that this kind of communication is most successful when the interaction is conducted on an 'adult to adult' level, involving a rational and fair exchange of information. But communication also tends to break down when customers and suppliers have different expectations of an interaction.

There are clearly limits to how far the metaphor of personal relationships can be applied to customer relationships. The relationships customers have with companies have different meanings to their relationships with their family and friends. But, despite these differences, personal relationship theory provides a useful framework for customer relationships and there are some fundamentals that exist in both, such as the importance of honesty, being treated as a human being, and keeping promises.

Moreover, good personal and supplier relationship require a great deal of understanding and effort from both parties. Ultimately, businesses need to consider how the types of bonds they have with their customers and the nature of the benefits they provide can help them achieve their desired business goals.

The full white paper is available from Ipsos MORI Loyalty's web site - click here (PDF document, no registration required).

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